Aavishkaar Group Founder Vineet Rai Summary Aavishkaar Group is recalibrating its climate investment strategy to balance long-term carbon sequestration projects with ‘quicker-return’ climate technology opportunities. Impact investor Aavishkaar Capital is increasingly seeking its long-cycle carbon bets with newer, faster-returning climate opportunities – areas where capital can convert more quickly, risks are easier to price, and returns don’t depend on 20-year biological curves. The shift comes even as the impact investor continues to build out its permanent capital vehicle for carbon sequestration, incorporated in 2024 as Aavishkaar Carbon, the firm’s founder Vineet Rai and Santosh Singh, managing director at Intellecap, the advisory arm of The Aavishkaar Group, told Mint in a joint interview. Aavishkaar Carbon was founded to invest in growing trees on Indian farms to promote carbon sequestration and monetize it through the carbon trading market. Sequestration is the process of capturing and storing carbon, and a permanent vehicle has unlimited tenure. The firm received $150 million in soft commitments from global companies, including oil majors and technology firms, interested in purchasing carbon credits generated from these projects to offset their emissions. Carbon credits trade between $15 and $100 in global markets, with ‘high-integrity’ credits commanding a premium. The strategy involves working with small landowners to increase tree cover and density, including planting native species such as salt and teak across 5,000–10,000 hectares. Aavishkaar is running two pilot projects in West Bengal and Jharkhand. Initially, small landowners are typically compensated through fixed payments, input support and intercropping income, with carbon revenue sharing kicking in later as sequestration increases. The firm had earlier explored launching a $350-500 million closed-end fund for carbon sequestration in 2022, Mint reported. While interest from investors, including development finance institutions, has been strong, the firm has moved away from the structure. Traditional funds typically have a 10-year term, which will force exits just as trees begin to sequester carbon at scale. Shift in capital structure In climate investing, opportunities broadly fall into three buckets. The first is decarbonisation, largely driven by corporate and industrial activity. The second is natural-resource-based bio-sequestration, such as forestry and land use projects. The third is technology-led carbon removal, where engineered solutions are used to extract carbon from the atmosphere. “The price difference is huge – a tree can earn you $10 per ton, while technology-based carbon removal can fetch $1,000 per ton, and buyers are willing to pay for that,” Rai said. Key Takeaways Aavishkaar has moved from a traditional 10-year closed-end fund model to a permanent capital vehicle to better align with 20-year tree growth cycles. The firm is adding ‘quick return’ bets such as Biochar and AWD to balance long-term agroforestry. There is a massive price difference in carbon removal; technology-led removal fetches up to $1,000/ton versus about $10/ton for nature-based sequestration. Aavishkaar is investigating carbon credit-linked bonds to attract private capital through familiar debt structures. The firm has secured $150 million in soft commitments from oil majors and technology firms for its carbon sequestration credits. The challenge with bio-sequestration is cost. These are 20-year projects, while most investors want to exit in 10–15 years. At 15 years, the tree is only halfway through its carbon sequestration cycle—precisely when yields begin to peak. A traditional fund structure forces liquidation only when the asset becomes valuable. “That’s why we decided to move away from a closed-end fund and set up a permanent capital vehicle, which allows us to hold the asset through its full biological and economic life cycle,” Rai said. At the same time, the climate ecosystem is already attracting capital to various mainstream sectors. Electric mobility and electric vehicle (EV) financing are closely linked to climate change, but transport itself is a mature and well-understood sector. That familiarity makes it easier for capital to flow when climate becomes an active theme because investors already understand the technology, risks and unit economics, Singh explained. Separately, the firm worked with financial institutions in Kenya to assess carbon-related risks and partnered with regulators to launch carbon credit-linked bonds, creating a path for private capital to enter carbon markets – a model it sees the potential to replicate in India as well. Shorter cycle bets Such bonds raise capital for climate projects, while linking investor returns to verified carbon credits. These credits can supplement bond repayments, affect coupon payments, or provide downside protection—allowing private investors to access carbon markets through a familiar bond structure rather than buying offsets outright. For its permanent capital vehicle, Aavishkaar is currently not raising fresh capital from the market. Instead, the firm is rebalancing its climate strategy by pairing long-term carbon bets with smaller, more digestible climate-tech investments that better align with investor timelines. While agroforestry remains part of the long-term thesis—often requiring 15–20 years to mature—the firm has expanded into shorter-cycle carbon interventions such as biochar and alternative wetting and drying (AWD) in agriculture. Biochar projects can generate outcomes over a much shorter horizon, while AWD interventions can show results within two to three years. The idea is to build a portfolio of carbon solutions with different time horizons, guided by clear impact principles, and test what can scale without locking up all capital in multi-decade projects, Singh explained. The shift reflects the scale and urgency of India’s climate finance needs. The country will need about $1.5 trillion for clean energy, transportation, biofuels and climate-resilient infrastructure by 2030 to meet its decarbonization goals, according to a Deloitte report this year. At the same time, climate technology investment is gaining momentum. Indian climate tech startups raised about $1.95 billion across 128 funding rounds between January and October 2025, a nearly 40% year-over-year increase, according to data from Tracxn. Policy winds are also taking shape: a draft Climate Finance Taxonomy released this year aims to channel capital to credible climate activities and combat greenwashing, in line with India’s net-zero by 2070 goal.